SHANGHAI: The central bank set the yuan's midpoint slightly higher against the dollar on Thursday, but the spot market opened and traded higher than the fix in response to an extended shallow slide by the dollar.
Global money markets continued to focus on developments in the United States and Europe, while Chinese traders were similarly waiting for new developments.
"There's not much appetite for going long or short the yuan in any aggressive way today," said a trader at a joint-stock bank in Shanghai, adding that transaction rates remained steady and that trading houses were resuming trading on their own account after sitting on the sidelines earlier in the week.
The People's Bank of China (PBOC) set the official midpoint at 6.3338, slightly softer than Wednesday, following a weakening trend in the midpoint that began last week.
Spot prices also firmed slightly, opening at 6.3258, marginally above Wednesday's close and marking the highest the yuan has opened against the dollar since late May. However, spot prices weakened from open and were trading at 6.3338 at midday.
Another trader said that customers were beginning to look to buy dollars at the present rate, which he believed would bring spot prices back to 6.34.
OFFSHORE AND FORWARDS
One-year forward rates, onshore and off, both softened, increasing their spread against spot rates. Forward rates express both differing interest rates and anticipations for appreciation or depreciation.
The offshore one-year non-deliverable forward contract weakened to 6.4190 while the onshore deliverable version of the same tenor changed hands at 6.4560.
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